-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TtUt6hudakZhrucZ9H+5soAD2F9jpAvrITczEX8QxVIN9hi2Uzw3nQhIqidyp2ry IUfO9tt8OJ7wh/anu/8sKw== 0000950116-98-001711.txt : 19980817 0000950116-98-001711.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950116-98-001711 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASTLE ENERGY CORP CENTRAL INDEX KEY: 0000709355 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 760035225 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10990 FILM NUMBER: 98688577 BUSINESS ADDRESS: STREET 1: ONE RADNOR CORPORATE CTR STE 250 STREET 2: 100 MATSONFORD RD CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 6109959400 MAIL ADDRESS: STREET 1: ONE RADNOR CORPORATE CENTER SUITE 250 STREET 2: 100 MATSONFORD CITY: RADNOR STATE: PA ZIP: 19087 FORMER COMPANY: FORMER CONFORMED NAME: MINDEN OIL & GAS INC/NEW DATE OF NAME CHANGE: 19861117 FORMER COMPANY: FORMER CONFORMED NAME: MINDEN HOLDING CO DATE OF NAME CHANGE: 19830310 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 -------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ended _______________________________________________ Commission file number: 0-10990 CASTLE ENERGY CORPORATION ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Delaware 76-0035225 - ------------------------------- ---------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) One Radnor Corporate Center, Suite 250, 100 Matsonford Road, Radnor, Pennsylvania 19087 ------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (610) 995-9400 -------------- ________________________________________________________________________________ (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check X whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes __X__ No _____. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 2,960,729 shares of Common Stock, $.50 par value outstanding as of August 7, 1998. CASTLE ENERGY CORPORATION INDEX
Page # ------ Part I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheets - June 30, 1998 (Unaudited) and September 30, 1997........................................................ 1 Consolidated Statements of Operations - Three Months Ended June 30, 1998 and 1997 (Unaudited)...................................... 2 Consolidated Statements of Operations - Nine Months Ended June 30, 1998 and 1997 (Unaudited)...................................... 3 Consolidated Statements of Cash Flows - Nine Months Ended June 30, 1998 and 1997 (Unaudited)...................................... 4 Consolidated Statements of Stockholders' Equity - Nine Months Ended June 30, 1998 (Unaudited) and Year Ended September 30, 1997............................................................ 5 Notes to the Consolidated Financial Statements (Unaudited) ................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)............................... 9 Part II. Other Information Item 1. Legal Proceedings............................................................. 18 Item 4. Submission of Matters to a Vote of Security Holders........................... 18 Item 5. Other Information............................................................. 18 Item 6. Exhibits and Reports on Form 8-K.............................................. 18 Signature ........................................................................................... 19
PART I. FINANCIAL INFORMATION Item 1. Financial Statements CASTLE ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS ("000's" Omitted Except Share Amounts)
June 30, September 30, 1998 1997 -------------- ------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents................................................. $ 38,383 $36,338 Restricted cash........................................................... 605 497 Accounts receivable....................................................... 6,863 5,868 Prepaid transportation, net............................................... 1,460 1,500 Prepaid gas purchases..................................................... 852 Prepaid expenses and other current assets................................. 354 452 Deferred income taxes..................................................... 3,788 2,239 Note receivable - Penn Octane Corporation................................. 1,000 Note receivable - MG...................................................... 10,000 Estimated realizable value of discontinued net refining assets............. 4,059 4,422 ---------- -------- Total current assets.................................................... 57,364 61,316 Property, plant and equipment, net: Natural gas transmission.................................................. 47 Furniture, fixtures and equipment......................................... 213 180 Oil and gas properties, net (full cost method)................................ 3,901 2,818 Gas contracts, net............................................................ 8,649 15,747 Prepaid transportation, net................................................... 1,162 Deferred income taxes......................................................... 1,494 ---------- --------- Total assets............................................................ $ 70,174 $82,717 ======== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Dividend payable.......................................................... $ 450 $ 707 Accounts payable.......................................................... 12,060 5,615 Accrued expenses.......................................................... 1,104 1,257 Net refining liabilities retained.......................................... 5,564 7,353 ---------- --------- Total current liabilities............................................... 19,178 14,932 Long-term liabilities......................................................... 13 20 ---------- ----------- Total liabilities....................................................... 19,191 14,952 --------- -------- Commitments and contingencies Stockholders' equity: Series B participating preferred stock; par value - $1.00; 10,000,000 shares authorized; no shares issued Common stock; par value - $0.50; 25,000,000 shares authorized; 6,803,646 shares issued at June 30, 1998 and 6,798,646 shares issued at September 30, 1997................................................... 3,402 3,399 Additional paid-in capital................................................ 67,122 67,061 Retained earnings......................................................... 33,014 22,468 --------- -------- 103,538 92,928 Treasury stock at cost - 3,789,617 shares at June 30, 1998 and 2,085,100 shares at September 30, 1997 (52,555) (25,163) ------- ------- Total stockholders' equity 50,983 67,765 --------- -------- Total liabilities and stockholders' equity.............................. $ 70,174 $82,717 ======== =======
The accompanying notes are an integral part of these financial statements. -1- CASTLE ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS ("000's" Omitted Except Share Amounts) (Unaudited)
Three Months Ended June 30, ------------------------------ 1998 1997 ----------- ----------- Revenues: Natural gas marketing and transmission: Gas sales ....................................................... $ 16,766 $ 13,944 Transportation .................................................. 7 ----------- ----------- 16,766 13,951 ----------- ----------- Exploration and production: Oil and gas sales ............................................... 641 1,227 Well operations ................................................. 57 87 ----------- ----------- 698 1,314 ----------- ----------- 17,464 15,265 ----------- ----------- Expenses: Natural gas marketing and transmission: Gas purchases ................................................... 9,859 8,247 Transportation .................................................. 343 81 Operating costs ................................................. 16 104 General and administrative ...................................... 75 40 Depreciation and amortization ................................... 2,365 2,590 ----------- ----------- 12,658 11,062 ----------- ----------- Exploration and production: Oil and gas production .......................................... 162 498 General and administrative ...................................... 377 351 Depreciation, depletion and amortization ........................ 175 563 ----------- ----------- 714 1,412 ----------- ----------- Corporate general and administrative expenses ..................... 567 761 ----------- ----------- 13,939 13,235 ----------- ----------- Operating income ...................................................... 3,525 2,030 ----------- ----------- Other income (expense): Gain on sale of assets ............................................ 19,667 Interest income ................................................... 514 409 Other income (expense) ............................................ (2) (22) Interest expense .................................................. (285) ----------- ----------- 512 19,769 ----------- ----------- Net income before provision for income taxes .......................... 4,037 21,799 ----------- ----------- Provision for (benefit of) income taxes: State ........................................................... (79) 49 Federal ........................................................... (2,748) 1,387 ----------- ----------- (2,827) 1,436 ----------- ----------- Net income ............................................................ $ 6,864 $ 20,363 =========== =========== Net income per share: Basic ............................................................. $ 2.06 $ 3.75 =========== =========== Diluted ........................................................... $ 2.02 $ 3.72 =========== =========== Dividend declared per share ........................................... $ .15 $ .15 =========== =========== Weighted average number of common and potential dilutive common shares outstanding: Basic .......................................................... 3,332,319 5,434,421 =========== =========== Diluted ........................................................ 3,404,773 5,467,473 =========== ===========
The accompanying notes are an integral part of these financial statements. -2- CASTLE ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS ("000's" Omitted Except Share Amounts) (Unaudited)
Nine Months Ended June 30, ------------------------------ 1998 1997 ----------- ----------- Revenues: Natural gas marketing and transmission: Gas sales ....................................................... $ 54,914 $ 52,736 Transportation .................................................. 7 ----------- ----------- 54,914 52,743 ----------- ----------- Exploration and production: Oil and gas sales ............................................... 1,861 6,003 Well operations ................................................. 172 322 ----------- ----------- 2,033 6,325 ----------- ----------- 56,947 59,068 ----------- ----------- Expenses: Natural gas marketing and transmission: Gas purchases ................................................... 34,058 32,322 Transportation .................................................. 1,203 81 Operating costs ................................................. 472 General and administrative ...................................... 113 717 Depreciation and amortization ................................... 7,096 8,274 ----------- ----------- 42,470 41,866 ----------- ----------- Exploration and production: Oil and gas production .......................................... 510 1,792 General and administrative ...................................... 684 966 Depreciation, depletion and amortization ........................ 502 1,462 ----------- ----------- 1,696 4,220 ----------- ----------- Corporate general and administrative expenses ..................... 2,135 2,543 ----------- ----------- 46,301 48,629 ----------- ----------- Operating income ...................................................... 10,646 10,439 ----------- ----------- Other income (expense): Gain on sale of assets ............................................ 19,667 Interest income ................................................... 1,745 844 Other income (expense) ............................................ 27 (73) Interest expense .................................................. (1,038) ----------- ----------- 1,772 19,400 ----------- ----------- Net income before provision for income taxes .......................... 12,418 29,839 ----------- ----------- Provision for income taxes: State ......................................................... 5 129 Federal ....................................................... 185 4,201 ----------- ----------- 190 4,330 ----------- ----------- Net income ............................................................ $ 12,228 $ 25,509 =========== =========== Net income per share: Basic ......................................................... $ 3.01 $ 4.20 =========== =========== Diluted ....................................................... $ 2.98 $ 4.19 =========== =========== Dividends declared per share .......................................... $ .45 $ .15 =========== =========== Weighted average number of common and potential dilutive common shares outstanding: Basic ......................................................... 4,066,103 6,077,685 =========== =========== Diluted ....................................................... 4,109,843 6,087,803 =========== ===========
The accompanying notes are an integral part of these financial statements. -3- CASTLE ENERGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS ("000's" Omitted) (Unaudited)
Nine Months Ended June 30, -------------------------- 1998 1997 ----------- ---------- Net cash flow provided by operating activities ........... $ 33,947 $ 70,649 -------- -------- Cash flows from investing activities: Investment in pipelines ............................... (47) (58) Investment in oil and gas properties .................. (1,585) (1,000) Investment in note receivable - Penn Octane Corporation (1,000) -------- -------- Net cash used in investing activities ..................... (2,632) (1,058) -------- -------- Cash flows from financing activities: Proceeds of long-term debt ............................. 13,986 Payment of debt issuance costs ......................... (420) Repayment of long-term debt ............................ (27,992) Dividends paid to stockholders ......................... (1,942) Acquisition of treasury stock .......................... (27,392) (16,773) Proceeds from exercise of stock options ................ 64 724 -------- -------- Net cash (used in) financing activities ................... (29,270) (30,475) -------- -------- Net increase in cash and cash equivalents ................. 2,045 39,116 Cash and cash equivalents - beginning of period ........... 36,338 3,457 -------- -------- Cash and cash equivalents - end of period ................. $ 38,383 $ 42,573 ======== ========
The accompanying notes are an integral part of these financial statements. -4- CASTLE ENERGY CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ("000's" Omitted Except Share Amounts)
Common Stock Additional Retained Treasury Stock --------------------- Paid-In Earnings ------------------- Shares Amount Capital (Deficit) Shares Amount Total ------ ------ ----------- ----------- ------ ------ --------- Balance - October 1, 1996 ......... 6,693,646 $ 3,347 $ 66,316 ($ 2,952) $ 66,711 Stock acquired .................... 2,085,100 ($ 25,163) (25,163) Options exercised ................. 105,000 52 745 797 Dividends ......................... (1,446) (1,446) Net income ........................ 26,866 26,866 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance - September 30, 1997 ...... 6,798,646 3,399 67,061 22,468 2,085,100 (25,163) 67,765 Stock acquired .................... 1,704,517 (27,392) (27,392) Options exercised ................. 5,000 3 61 64 Dividends declared ................ (1,682) (1,682) Net income ........................ 12,228 12,228 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance - June 30, 1998 (Unaudited) 6,803,646 $ 3,402 $ 67,122 $ 33,014 3,789,617 ($ 52,555) $ 50,983 ========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. -5- Castle Energy Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share amounts) (Unaudited) Note 1 - Basis of Preparation The unaudited consolidated financial statements of Castle Energy Corporation (the "Company") included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain reclassifications have been made to make the periods presented comparable. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, the Company believes that the disclosures included herein are adequate to make the information presented not misleading. Operating results for the three month and the nine month periods ended June 30, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 1998 or for subsequent periods. These unaudited consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended September 30, 1997 and the notes thereto included in the Company's Annual Report on Form 10-K. In the opinion of the Company, the unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the results of operations for the three and nine month periods ended June 30, 1998 and 1997 and for a fair statement of financial position at June 30, 1998. Note 2 - September 30, 1997 Balance Sheet The amounts presented in the balance sheet as of September 30, 1997 were derived from the Company's audited consolidated financial statements for the fiscal year ended September 30, 1997, which were included in its Annual Report on Form 10-K. Note 3 - Discontinued Operations From August 1989 to September 30, 1995, several of the Company's subsidiaries conducted refining operations. By December 12, 1995, the Company's refining subsidiaries had sold all of their refining assets. In addition, Powerine Oil Company ("Powerine"), one of the Company's refining subsidiaries, merged into a subsidiary of the purchaser and is no longer a subsidiary of the Company. The Company's other refining subsidiaries own no refining assets and are in the process of liquidation. As a result, the Company has accounted for its refining operations as discontinued operations. Note 4 - Contingencies/Litigation Powerine Arbitration In October 1997, the Company recovered $8,700 from the Powerine Arbitration. The Company believes it is entitled to an additional $2,142 plus interest and its special legal counsel presented arguments to the arbitrator to recover this amount. On January 27, 1998, the arbitrator ruled against the Company. The Company is currently pursuing other measures to recover the $2,142 plus interest -6- Castle Energy Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share amounts) (Unaudited) it believes it is due. Reference should be made to Item 3 of the Company's Annual Report on Form 10- K for the year ended September 30, 1997. SWAP Agreement - MGNG In January 1998, Indian Refining Limited Partnership ("IRLP"), an inactive refining subsidiary of the Company, filed suit against MG Refining and Marketing, Inc. ("MGR&M"), a subsidiary of Metallgesellschaft Corp. ("MG"), to collect $703 plus interest. In February 1998, MG contended that the $703 is not owed to IRLP and that it had liquidated MGR&M. Management and general counsel believe that MG's counterclaims are not supported by the facts or Delaware law. Discovery related to the lawsuit is beginning. Reference should be made to Item 3 of the Company's Annual Report on Form 10-K for the year ended September 30, 1997. MGNG Litigation On May 4, 1998, a subsidiary of the Company filed a lawsuit against MG Natural Gas Corp. ("MGNG") and MG Gathering Company ("MGG"), two subsidiaries of MG, in the district court of Harris County, Texas. The Castle subsidiary seeks to recover gas measurement and transportation expenses charged by the defendants in breach of a certain gas purchase contract. Improper charges exceed $750 before interest. The MG entities have sought to change the jurisdiction of the case to Delaware and have denied the charges were improper. Discovery has commenced. Note 5 - GAMXX Agreement On February 27, 1998, the Company entered into an agreement ("GAMXX Agreement") with Alexander Allen, Inc. ("AA") concerning amounts owed to the Company by AA and its subsidiary, GAMXX Energy, Inc. ("GAMXX"). The Company had made loans to GAMXX through 1991 in the aggregate amount of approximately $8,000. When GAMXX was unable to obtain financing, the Company recorded a one hundred percent loss provision on its loans to GAMXX while still retaining its lender's liens against GAMXX. Pursuant to the terms of the GAMXX Agreement, the Company is to receive $1,000 cash in settlement for its loans when GAMXX closes on its financing. GAMXX now expects such closing to occur in August or September of 1998. The Company has carried its loan to GAMXX at zero the last seven years. The Company will record the $1,000 proceeds as "other income" if and when it collects such amount. There can, however, be no assurance that GAMXX will close on its financing or that the Company will ultimately collect the $1,000 it is due under the GAMXX Agreement. -7- Castle Energy Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share amounts) (Unaudited) Note 6 - Accounting Pronouncements In February 1997, FASB issued SFAS No. 128, "Earnings Per Share," ("FAS No.128") which establishes standards for computing and presenting earnings per share ("EPS") for entities with publicly held common stock. SFAS No. 128 simplifies the standards for computing EPS previously found in Accounting Principles Board Opinion No. 15, "Earnings Per Share," and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS, and requires dual presentations of basic and diluted EPS on the face of the income statement. SFAS No. 128 is effective for fiscal years ending after December 15, 1997, and early adoption is not permitted. The Company adopted FAS 128 effective October 1, 1997. Earnings per share for the three and nine month periods ended June 30, 1998 have been stated in accordance with FAS No. 128 and earnings per share for the three and nine month periods ended June 30, 1997 have been restated in accordance with FAS No. 128. Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), was issued by the Financial Accounting Standards Board in June 1998. SFAS 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts. Under the standard, entities are required to carry all derivative instruments in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding it. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair values, cash flows, or foreign currencies. If the hedged exposure is a fair value exposure, the gain or loss on the derivative instrument is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a component of other comprehensive income (outside earnings) and subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness, as well as the ineffective portion of the gain or loss, is reported in earnings immediately. Accounting for foreign currency hedges is similar to the accounting for fair value and cash flow hedges. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change. The Company expects to adopt SFAS 133 in fiscal 2000. To date all hedging by the Company has been applicable to the Company's gas marketing operations. Those operations are expected to end on May 31, 1999 when the related gas contracts terminate. As a result the Company believes SFAS 133 will not affect existing operations and cannot make a determination as to whether it will effect future operations until it engages in such operations. Note 7 - Derivative Financial Instruments The Company utilizes derivative financial instruments to reduce its exposure to changes in the market price of natural gas. Commodity derivatives utilized as hedges of natural gas are futures contracts. Natural gas basis swaps are sometimes used to hedge the basis differential between the derivative financial instrument index price and the natural gas field price. In order to qualify as a hedge, price movements in the underlying commodity derivative must be highly correlated with the hedged commodity. Gains and losses on futures contracts that qualify as a hedge of firmly committed or anticipated purchases and sales of natural gas are deferred on the balance sheet and credited or debited to cost of gas purchased and recognized in operations when the related hedged transaction occurs. Gains or losses on derivative financial instruments that do not qualify as a hedge are recognized in income currently. There were no such deferred gains or losses at June 30, 1998 or September 30, 1997. As a result of hedging transactions, the cost of gas purchased increased $864 for the nine months ended June 30, 1998 and decreased $580 for the nine months ended June 30, 1997 Note 8 - Penn Octane Note See Management's Discussion and Analysis of Financial Condition and Results of Operations. Note 9 - Subsequent Events Subsequent to June 30, 1998, the Company repurchased 53,300 shares of its outstanding common stock for $913. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS As noted previously, the Company had discontinued its refining operations by September 30, 1995. As a result, management's discussion and analysis focus primarily on the Company's continuing operations -- natural gas marketing and exploration and production. All references herein to dollars are in thousands. In May 1997, the Company sold approximately 84% of its proved oil and gas reserves and its Texas pipeline to Union Pacific Resources Company ("UPRC") and one of its subsidiaries. As a result, the operations related to the assets sold impacted operations for eight of nine months in fiscal 1997 but had no impact in fiscal 1998. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and has included a discussion of risk factors related to Management's Discussion and Analysis of Financial Condition and Results of Operations. The discussion and analysis below include forward-looking data that are based upon management's estimates, assumptions and projections. Important factors such as the risk factors listed below and other factors could cause results to differ materially from those expected by management. NATURAL GAS MARKETING As noted above, the Company sold its Texas oil and gas properties and pipeline to UPRC in May of 1997 while retaining its gas marketing operations which consist primarily of a long-term gas sales contract ("Lone Star Gas Contract") with Lone Star Gas Company ("Lone Star"). The sale had the following effects on the Company's natural gas marketing operations: a. The Company now has to purchase gas for the Lone Star Contract that previously was produced from the Company's Texas oil and gas properties. As a result, the Company became subject to price risk on such future gas purchases whereas previously the Company was subject to reserve production risk - the possibility that the volumes of gas produced were more or less than those expected. Previously, the Company's marketing subsidiary purchased a portion of the gas required for the Lone Star Contract from one of the Company's exploration and production subsidiaries. The resultant intercompany sales were eliminated in consolidation. Since the sale to UPRC, the Company's gas marketing subsidiary has purchased all gas required for the Lone Star Contract from unrelated parties. b. Having sold its Texas pipeline, the Company now requires outside transportation to transport its gas to Lone Star. A subsidiary of UPRC, the purchaser of the Company's Texas pipeline, agreed to transport all of the remaining Lone Star gas as part of the related purchase and sale agreement. The Company has recorded the value of such prepaid transportation at $3,000, its estimated fair market value, and is amortizing the prepayment over the term of the Lone Star Contract based upon deliveries made. Previously, the Company incurred operating expenses to operate the pipeline and recorded pipeline depreciation. -9- Gross Margin A comparison of the gross margins earned by the Company's natural gas marketing segment is as follows:
Lone Star MGNG Intercompany Contract Contract Eliminations Consolidated -------- -------- ------------ ------------ Nine Months Ended June 30, 1998: Gas Sales $51,233 $3,681 $54,914 Gas purchases (29,513) (4,545) (34,058) ------- ------ ------- Gross margin (deficit) $21,720 ($ 864) $20,856 ======= ======= ======= Nine Months Ended June 30, 1997: Gas Sales $52,491 $3,668 ($3,423) $52,736 Gas purchases (31,626) (4,119) 3,423 (32,322) ------- ------ ------- ------- Gross margin $20,865 ($ 451) $ - $20,414 ======= ======= ========== =======
Natural gas sales under the Lone Star Contract decreased $1,258 or 2.4% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. Under the Lone Star Contract the price received for gas is essentially fixed through May 31, 1999. The variance in gas sales, therefore, is almost entirely attributable to the volumes of gas delivered. Although the volumes delivered to Lone Star annually are essentially fixed (the Lone Star Contract has a take-or-pay provision), the Lone Star Contract year is from February 1 to January 31 whereas the Company's fiscal year is from October 1 to September 30. Furthermore, although the volumes to be taken by Lone Star in a given contract year are fixed, there is no provision requiring fixed monthly or daily volumes and deliveries accordingly vary with Lone Star's seasonal and peak demands. Such variances have been significant. As a result, Lone Star deliveries, although fixed for a contract year, may be skewed and not proportional for the Company's fiscal periods. For the first nine months of fiscal 1998 deliveries and sales to Lone Star exceeded by approximately 7.3% those which would have resulted if daily deliveries had been fixed and equal. Since annual deliveries and sales have historically approximated the annual volumes Lone Star is required to take under the Lone Star Contract, it is expected that deliveries and sales for the remainder of fiscal 1998 will average less than those which would have resulted if daily deliveries were fixed and equal. Gas purchases for the Lone Star Contract decreased $2,113 or 6.7% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. For the nine months ended June 30, 1997 gas purchases comprised 60.3% of gas sales versus 57.6% of gas sales for the nine months ended June 30, 1998. From 1997 to 1998 the gross margin increased $855 or 4.1%. During the same periods the gross margin percentage ((gas sales - gas purchases) as a percentage of gas sales) increased 2.7% from 39.7% for the nine months ended June 30, 1997 to 42.4% for the nine months ended June 30, 1998. The decrease in gas purchases as a percentage of gas sales and related increase in the gross margin percentage resulted primarily from a non-recurring favorable adjustment of gas purchase costs ($517) in fiscal 1998, the replacement of high price contracts expiring in April 1997 with market price contracts and lower market prices in fiscal 1998. The Company acquires approximately 90% of -10- the gas required for the Lone Star Contract pursuant to a fixed price gas sales contract with MGNG ("MG Contract"). As a result the changes in the periods being compared relate primarily to factors affecting the 10% of gas supplies that the Company must acquire on the open market at market prices. As of August 7, 1998, the Company had hedged all of this requirement and thus the Company is not subject to gas price risk with respect thereto. MGNG Contract One of the Company's natural gas marketing subsidiaries is a party to the MG Contract. Pursuant to the terms of the contract, the subsidiary is required to sell to MGNG 7,356 MMBtu's (British thermal units) of natural gas at a fixed price ratably over the period from June 1, 1996 to May 31, 1999. The fixed price for the gas sold to MGNG is significantly less than the fixed price of gas sold to Lone Star. For the nine months ended June 30, 1998, the Company realized a negative gross margin of $864 versus a negative gross margin of $451 for the nine months ending June 30, 1997. The negative margins resulted because the spot (market) prices paid by the Company for gas, net of hedging effects where applicable, exceeded the fixed price received by the Company from MGNG under the contract. The higher negative gross margins for the nine months ended June 30, 1998 resulted because the spot prices paid by the Company, net of hedging effects, were greater in fiscal 1998 than in fiscal 1997. Subsequent to June 30, 1998, the Company hedged all of its remaining unhedged gas requirements. As a result of such hedging, the Company expects additional losses on its gas sales contract with MGNG of approximately $460 through May 31, 1999, the termination date. Operating Costs Operating costs decreased to zero for the nine months ended June 30, 1998 from $472 for the nine months ended June 30, 1997 because the Texas pipeline was sold to UPRC in May 1997 and as of June 1, 1997 the Company no longer incurred operating costs to operate the Texas pipeline. General and Administrative General and administrative costs decreased $604 from $717 for the nine months ended June 30, 1997 to $113 for the nine months ended June 30, 1998. Most general and administrative costs incurred during the nine months ended June 30, 1997 related to the Texas pipeline, which was sold in May 1997. The remaining administrative costs consist primarily of consulting fees for on-going gas marketing operations. Transportation Transportation expense increased $1,122 from $81 for the nine months ended June 30, 1997 to $1,203 for the nine months ended June 30, 1998. During the period October 1, 1996 to May 31, 1997, one of the Company's subsidiaries owned and operated the Texas pipeline and all transportation revenues were for intercompany transportation and were accordingly eliminated in consolidation of the Company's financial statements. On May 31, 1997, the Company sold the Texas pipeline to a subsidiary of UPRC. In both 1997 and 1998, transportation expense consisted entirely of the amortization of a $3,000 prepaid transportation asset. Amortization is based upon and thus proportional to deliveries made to Lone Star. In fiscal 1997, one month's transportation expense was recorded versus nine months' expense in fiscal 1998. -11- Depreciation and Amortization Depreciation and amortization decreased $1,178 or 14.2% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The decrease is attributable to the sale of the Texas pipeline to UPRC in May 1997. As a result of the sale, the Company no longer owned or depreciated the Texas pipeline. EXPLORATION AND PRODUCTION As noted above, the Company sold its Texas oil and gas properties to UPRC in May 1997. The reserves sold represented approximately 84% of the Company's proved oil and gas reserves and 60%- 65% of the Company's gas production at the time of sale. Comparison of current oil and gas sales, production costs, general and administrative costs and depletion, depreciation and amortization to those in fiscal 1997 is thus not meaningful. Accordingly, exploration and production operations comparisons and analysis have been limited to those oil and gas properties which were not sold to UPRC. The related operating results for such properties are as follows: Nine Months Ended June 30, -------------------------- 1998 1997 ---- ---- Revenues: Oil and gas sales............................. $1,861 2,373 Well operations............................... 172 236 ------- ------ 2,033 2,609 ------- ------ Expenses: Oil and gas production........................ 510 380 General and administrative.................... 684 593 Depreciation, depletion and amortization...... 502 521 ------- ------ 1,696 1,494 ------- ------ Operating income................................... $ 337 $1,115 ======= ====== Revenues Oil and Gas Sales Oil and gas sales decreased $512 or 21.6% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The decrease is attributable to decreased oil and gas prices and decreased production. Many of the Company's oil and gas reserves are mature reserves and such decreased production is expected. Although the Company has participated in drilling approximately twenty-five new wells and reworks from July 1997 through June 30, 1998, production from such new drilling activities has only recently begun impacting operations. The Company is currently participating in two drilling programs and expects to participate in at least five additional, new wells in fiscal 1998. The Company is also reviewing possible investments in other oil and gas drilling programs and oil and gas property acquisitions, including several oil and gas investments overseas. As a result, the Company expects that, if it is successful in making acquisitions, its oil and gas sales will eventually increase given stable or increasing oil and gas sales prices but there can be no assurance that wells expected to be drilled will actually be drilled, that the Company will be successful in making acquisitions or that oil and gas sales will increase. -12- Well Operations Revenue from well operations decreased $64 or 27.1% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The decrease is attributable to the Company's resignation as operator on certain Appalachian wells where a non-operator offered to operate the wells at a cost significantly less than that being incurred by the Company in performing such operations. The related well operations revenues were not replaced. Expenses Oil and Gas Production Oil and gas production expenses increased $130 or 34.2% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The increase in oil and gas production expenses results from the general maturing of the Company's oil and gas properties and the tendency for older, depleting properties to carry a higher production expense burden than recently drilled properties. Furthermore, oil and gas production expenses, especially non-capitalized repairs, do not generally occur evenly throughout the year and are best compared on an annual rather than on a quarterly basis. The Company expects that, although oil and gas production expense will increase as a result of its new drilling activities, such expenses will decline when compared to oil and gas sales given the lower production costs typically associated with new production. There can be no assurance, however, that such will be the case. General and Administrative General and administrative costs increased $91 or 15.3% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The net increase was primarily attributable to higher employee costs and bonuses and increased legal costs. The increase was offset to a minor extent by tax refunds and vendor settlements in 1998 for which there was no counterpart in fiscal 1997. Depreciation, Depletion and Amortization Depreciation, depletion and amortization decreased $19 or 3.6% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The decrease is attributable to decreased production, offset by a slightly higher depletion rate per unit of production. OTHER INCOME (EXPENSE) Interest Income Interest income increased $901 or 106.8% from the first nine months of fiscal 1997 to the first nine months of fiscal 1998. The increase is primarily attributable to an increase in the average balance of unrestricted cash. For the nine months ended June 30, 1997, $600 of interest income was attributable to a note receivable from MG related to the Powerine Arbitration and $244 resulted from the investment of excess cash. For the nine months ended June 30, 1998, $31 was attributable to interest on the MG note, $69 was attributable to interest on a note from Penn Octane Corporation ("Penn Octane"), a public company involved in liquid petroleum and compressed natural gas business, and the remaining $1,645 was attributable to the investment of excess cash. Interest on the MG note ceased on October 14, 1997. -13- Interest Expense Interest expense decreased $1,038 from $1,038 for the nine month period ended June 30, 1997 to zero for the nine months ended June 30, 1998 because the Company repaid all of its long-term debt in May 1997 with a portion of the proceeds from the sale of its Texas oil and gas properties and pipeline to UPRC. OTHER INCOME (EXPENSE) Penn Octane Note In October 1997, the Company invested $1,000 in a promissary note of Penn Octane. The note bears interest at 10% payable quarterly and was due on June 30, 1998. At June 30, 1998, Penn Octane did not repay the note. In May of 1998, Penn Octane was awarded a judgement against a bank and such judgement is in excess of the $1,000 owed to the Company by Penn Octane. In July of 1998, Penn Octane agreed to grant the Company a first security interest on the proceeds of the judgement in return for an extension of the note until December 31, 1998. The final agreement is currently being negotiated by the parties. Penn Octane has paid all interest due on the note. Although it appears that the judgement will be collected before December 31, 1998, the extended due date of the note, there can be no assurance that the bank will not appeal the judgement and such appeal will not continue beyond December 31, 1998, that the judgement will not be reversed upon appeal or that the bank will ultimately pay the judgement assessed to Penn Octane. If the note is not repaid by its extended due date, the Company intends to reduce the Penn Octane note to its estimated realizable value, if any. TAX PROVISION The tax provision for the nine month period ended June 30, 1997 essentially represents the amortization of the Company's deferred tax assets at an effective rate of 36% of pre-tax book income. The tax provision for the nine months ended June 30, 1998 consists of a tax provision of $3,978 (amortization of deferred tax asset) and an offsetting tax recovery of $3,788. The Company evaluated its need for a deferred tax valuation allowance at June 30, 1998 based upon recent positive evidence confirming the Company's ability to utilize its tax carryforwards. As a result the deferred tax valuation allowance was reduced $3,788 in June 1998. The Company expects that its future tax expense for book purposes will thus be 36% although the Company is only paying taxes at a 2% rate. The 2% rate results from Federal alternative minimum taxes. Earnings Per Share Since November 1996, the Company has reacquired 3,842,917 (3,789,617 at June 30, 1998) shares of its common stock representing approximately 56.5% (55.7% at June 30, 1998) of shares outstanding. As a result of these share acquisitions, earnings per share have increased significantly. If no shares had been reacquired, earnings per share, assuming no income from the cash used for share acquisitions, would have been as follows: -14- Nine Months Ended June 30, -------------------------- 1998 1997 ---- ---- Basic........................................ $1.80 $3.76 Diluted...................................... $1.79 $3.74 Accounting Pronouncements See Note 6 to the financial statements. LIQUIDITY AND CAPITAL RESOURCES All statements other than statements of historical fact contained in this report are forward-looking statements. Forward-looking statements in this report generally are accompanied by words such as "anticipate," "believe," "estimate," or "expect" or similar statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ materially from the results discussed in such forward-looking statements are disclosed in this report, including without limitation in conjunction with the expected cash receipts and expected cash obligations included below. All forward-looking statements in this report are expressly qualified in their entirety by the cautionary statements in this paragraph. During the nine months ended June 30, 1998, the Company generated $33,947 from operating activities. Of this amount, $8,700 represented the collection of a portion of the MG Note. During the same period the Company invested $1,000 in a note from Penn Octane, $1,585 in oil and gas drilling activities and $27,392 to reacquire shares of its common stock. In addition, it paid $1,942 in stockholder dividends. At June 30, 1998, the Company had $38,383 of unrestricted cash, $38,186 of working capital and no long-term debt. At the present time the probable future cash expenditures of the Company consist of the following: a. Investments in Oil and Gas Properties and Energy Sector - the Company has already entered into a joint venture to drill up to 100 wells in Appalachia over the next three to four years and has undertaken a 10-13 well drilling program on its undrilled Alabama acreage. Nine Appalachian wells have been drilled by the joint venture. In addition, the Company has drilled nine new coalbed methane wells and reworked another six wells in Alabama. At least eleven new Appalachian wells are planned by the joint venture over the next year and the Company plans to drill additional coalbed methane wells in Alabama. In addition, the Company is also reviewing several possible joint ventures, reserve acquisitions and drilling ventures, including several overseas, as well as other investments in the energy sector. The Company believes that low oil and gas prices will increase the probability that the Company can conclude a transaction or several transactions on terms favorable to the Company. There can be no assurance, however, that oil and gas prices will decrease and remain low or that a transaction will be closed even if such prices decrease and remain low. Several competitors have significantly more resources than the Company and may outbid it in future acquisitions. b. Repurchase of Company Shares - as of August 7, 1998, the Company had repurchased 3,842,917 of its shares of common stock at a cost of $53,468. The Company's Board of Directors has authorized the repurchase of up to 4,250,000 shares to provide an exit -15- vehicle for investors who want to liquidate their investment in the Company. As a result, 407,083 shares can be repurchased under the current authorization of the Board of Directors. The decision whether to repurchase additional shares will depend upon the market price of the Company's stock, tax considerations, the number of stockholders seeking to sell their shares and other factors. c. Recurring Dividends - the Company's Board of Directors adopted a policy of paying a $.60 per share annual dividend ($.15 per share quarterly) in June of 1997. The Company expects to continue to pay such dividend until the Board of Directors, in its sole discretion, changes such policy. An estimate of the Company's expected cash resources and obligations from July 1, 1998 to September 30, 1999, the fiscal year end during which the Lone Star Contract expires, is as follows:
Expected Cash Resources: ("000's" Omitted) Unrestricted cash on hand - June 30, 1998......................... $38,383 Cash flow - gas marketing and exploration and production operations.................................................... 24,810 Repayment of Penn Octane Corporation note......................... 1,000 Proceeds from SWAP litigation - IRLP.............................. 703 Proceeds from American Western note............................... 2,919 Interest.......................................................... 3,282 --------- 71,097 --------- Expected Cash Obligations: New drilling...................................................... 2,415 Purchase of 53,300 shares of common stock of the Company from July 1, 1998 to August 7, 1998........................... 913 Quarterly dividends (based on outstanding shares at August 7, 1998)......................................................... 2,220 Assumed IRLP payment of vendors and funding of environmental reserves........................................ 3,839 --------- 9,387 --------- Excess of Expected Cash Resources Over Expected Cash Obligations................................................... $61,710 =======
The foregoing estimates assume that the Company's operations and expected cash flow will not be affected by any of the risk factors listed below: a. Contingent environmental liabilities b. Vendor liabilities of the Company's inactive refining subsidiaries c. Larry Long Litigation d. Credit risk - Lone Star e. Supply risk - MGNG f. Price risk - gas supply g. Gas contract litigation - Lone Star, MGNG h. Public market for Company's stock -16- i. Future of the Company j. Year 2000 risk - accounting and operations k. Other risks including general business risks, insurance claims against the Company in excess of insurance recoveries, tax liabilities resulting from tax audits, drilling risks and litigation risk. In addition, the Company is subject to reserve and price risk on the oil and gas properties it owns. Reserve risk is the possibility that the reserves produced will not approximate the reserves the Company has estimated. Price risk is the possibility that the price the Company receives for its production will vary from current oil/gas prices. Since the Company has not hedged its future production, changes in oil and gas prices will affect the results of its exploration and production operations. Lone Star has recently informed the Company that it intends to limit daily deliveries under the Lone Star Contract to precise nominated quantities rather than a reasonable allowance in excess of such nominated quantities. The Company and Lone Star are currently negotiating this point. If the Company is unsuccessful the Company could incur a loss on the sale of gas in excess of quantities nominated by Lone Star. Although the Company does not anticipate a material loss, such may not be the case. UPRC has recently terminated employees responsible for the UPRC deliveries of the Company's gas to Lone Star. If deliveries to Lone Star are hindered by related pipeline operations problems, the Company could fail to deliver amounts of gas nominated by Lone Star and by so doing lose the high gross margins realized on the sale of such gas. The Company has assumed that its note extension agreement with Penn Octane will be entered into and its note due from Penn Octane will be paid on its extended due date, December 31, 1998. To date, all interest on the note has been paid but the due date of the note was extended when Penn Octane failed to pay it on its original due date, June 30, 1998. Although the Company expects to receive a security interest in the proceeds of a judgement due to Penn Octane from a bank in return for extending the due date of the Penn Octane note, there can be no assurance that Penn Octane will ultimately collect the judgement and repay the note to the Company. The Company has recently completed a study of the Year 2000 issue and related risks. As a result of the study, the Company has decided to switch its oil and gas and general ledger accounting software to a vendor which is Year 2000 compliant. The Company expects the cost to approximate $100. The Company expects to begin using the new software in the first quarter of fiscal 1999. The Company has also made inquiries to outside parties who process transactions of the Company, e.g., payroll, commercial banks, transfer agent, reserve engineers, etc. While some outside parties have confirmed they are Year 2000 compliant, others have not done so to the Company's satisfaction. The Company is continuing to pursue the vendors whose responses appear to provide insufficient assurance. Readers should refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations Section of the Company's Form 10-K for the fiscal year ended September 30, 1997 for a detailed description of the aforementioned risk factors. If any or several of these risks materialize, the Company's estimated cash flow and results of operations will probably be adversely impacted and the impact may be material. The estimated cash flow above assumes none of these risks materializes. Given the number and variety of risks and the litigiousness of today's corporate world, it is reasonably possible that one or more of these risks may occur. -17- PART II. OTHER INFORMATION Item 1. Legal Proceedings For information regarding lawsuits, reference is made to Item 3 of the Company's Form 10-K (Annual Report) for the fiscal year ended September 30, 1997. Also see Note 4 to the June 30, 1998 financial statements included in Part I. Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders was held on June 18, 1998. Proxies were solicited pursuant to the Notice of Annual Meeting of Stockholders, dated April 20, 1998 and the accompanying Proxy Statement. A total of 3,546,029 shares were eligible to vote of which 3,339,046 were present in person or by proxy. Messrs. Joseph L. Castle II and Sidney F. Wentz were elected to serve as directors until the 2001 Annual Meeting. The number of votes with respect to Mr. Castle was 3,337,738 votes for his election and 2,413 votes withheld. The number of votes with respect to Mr. Wentz was 3,337,266 votes for his election and 2,285 votes withheld. At the Annual Meeting, the stockholders also approved the appointment of KPMG Peat Marwick LLP as the Company's independent accountants for the fiscal year ending September 30, 1998 by a vote of 3,339,036 votes for such appointment, 1,158 against and 357 abstentions. In addition to the above, John P. Keller, Martin R. Hoffmann and Richard E. Staedtler continued on the Board of Directors. Item 5. Other Information The persons named as proxies on the form of proxy used to be mailed in connection with the solicitation of proxies on behalf of the Company's Board of Directors in connection with the Company's 1999 Annual Meeting of Stockholders will be authorized to vote in their own discretion on any proposal as to which the Company shall not have received written notice by March 15, 1999. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: Exhibit 11.1 - Statement re: Computation of Earnings Per Share Exhibit 27 - Financial Data Schedule (B) Reports on Form 8-K: None -18- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 13, 1998 CASTLE ENERGY CORPORATION --------------- /s/Richard E. Staedtler ----------------------- Richard E. Staedtler Chief Financial Officer Chief Accounting Officer -19- EX-11 2 EXHIBIT 11.1 Exhibit 11.1 (1 of 2) Castle Energy Corporation Statement of Computation of Earnings Per Share (Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended June 30, --------------------------------------------------------------------- 1998 1997 ------------------------------- ------------------------------- Basic Diluted Basic Diluted ------------ ------------ ------------ ------------ I. Shares Outstanding, June 30 3,546,029 3,546,029 5,439,546 5,439,546 II. Stock Purchased During the Period: Options exercised (weighted) 2,940 2,940 42,417 42,417 Purchase of treasury stock (weighted) (216,650) (216,650) (47,542) (47,542) ------------ ------------ ------------ ------------ 3,332,319 3,332,319 5,434,421 5,434,421 III. Weighted Equivalent Shares: Assumed options exercised 72,454 33,052 ------------ ------------ ------------ ------------ IV. Weighted Average Shares and Equivalent Shares 3,332,319 3,404,773 5,434,421 5,467,473 ============ ============ ============ ============ V. Net Income $ 6,864,000 $ 6,864,000 $ 20,363,000 $ 20,363,000 ============ ============ ============ ============ VI. Net Income Per Share $ 2.06 $ 2.02 $ 3.75 $ 3.72 ============ ============ ============ ============
Exhibit 11.1 (2 of 2) Castle Energy Corporation Statement of Computation of Earnings Per Share (Dollars in thousands, except per share amounts) (Unaudited)
Nine Months Ended June 30, --------------------------------------------------------------------- 1998 1997 ------------------------------- ------------------------------- Basic Diluted Basic Diluted ------------ ------------ ------------ ------------ I. Shares Outstanding, June 30 4,713,546 4,713,546 6,693,646 6,693,646 II. Stock Purchased During the Period: Options exercised (weighted) 2,728 2,728 20,277 20,277 Purchase of treasury stock (weighted) (650,171) (650,171) (636,238) (636,238) ------------ ------------ ------------ ------------ 4,066,103 4,066,103 6,077,685 6,077,685 III. Weighted Equivalent Shares: Assumed options exercised 43,740 10,118 ------------ ------------ ------------ ------------ IV. Weighted Average Shares and Equivalent Shares 4,066,103 4,109,843 6,077,685 6,087,803 ============ ============ ============ ============ V. Net Income $ 12,228,000 $ 12,228,000 $ 25,509,000 $ 25,509,000 ============ ============ ============ ============ VI. Net Income Per Share $ 3.01 $ 2.98 $ 4.20 $ 4.19 ============ ============ ============ ============
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED JUNE 30, 1998 INCLUDED IN PART I FINANCIAL INFORMATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS SEP-30-1999 JUN-30-1998 38,383 0 6,863 0 0 57,364 12,237 8,076 70,174 19,178 0 0 0 3,402 47,581 70,174 56,947 56,947 34,058 46,301 0 0 0 12,418 190 12,228 0 0 0 12,228 3.01 2.98
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